Every day we listen to reports on various news platforms about this or that with regard to cryptocurrencies and, with the recent market correction, the market has been in a state of confusion. Some, like ABC News as can seen in the video below, reported that there is a possible bubble in market prices months ago.
But that’s exactly the issue; everyone seems to be pointing out the problem, but no one actually seems to be keen on providing solutions. And those that care enough to guide others, do so at a fee in the form of online courses, paid seminars, and more.
This is why I saw the need to put up this post and provide some useful tips to guide your trading in a time when the market seems to be bullish. Other than the tips, I will also share with some of the most volatile cryptocurrencies you need to watch out for and the best one among them for day trading.
These tips are more of safety rules; and as the soldiers would have it, such rules are written in blood.
Even though we’re not talking about risking human lives here, losing your coins due to trading without a proper guideline isn’t a fun moment.
So, how can we avoid making costly mistakes? How can we ensure that we always remain on the green side?
First of all, you need to understand that profitable trading requires a lot of attentiveness; it isn’t a gamble and nor should it ever be one. Other than the following 10 tips, ensure that you pay close attention to the market forces of demand and supply to be able to know when this or that tip applies. It is paramount to internalize every tip in this guide and to understand the reasoning behind it.
With that, let’s begin!
Tips for Cryptocurrency Trading
Tip#1. Have a motive for entering each trade
Now, I know this may sound obvious but it’s important for you to have a clear purpose for getting into cryptocurrency trade. Whether your purpose is to day trade or to scalp, you need to have a purpose for starting to trade cryptos. Trading digital currencies is a zero-sum game; you need to realize that for every win, there is a corresponding loss:. Someone wins; someone else loses.
The cryptocurrency market is controlled by the large ‘whales’, pretty much like the ones that place thousands of Bitcoins in the market order books. And can you guess what these whales do best? They have patience; they wait for innocent traders like you and me to make a single mistake that lands our money to their hands due to avoidable mistakes.
Whether you are a day trader or scalper, sometimes you’re better off not gaining anything on a certain trade than rushing your way into losses. From our years of market analysis, we can comfortably tell you that on certain day or periods, you can only stay profitable by keeping off some trades.
Tip#2. Set profit targets and make use of stop losses
If you’ve not heard of the term stop loss in trading, check out this link to help you understand what it’s all about.
Every trade we get into requires us to know when to get out, whether we’re making a bitcoin profit or not. Establishing a clear stop loss level can help you cut your losses; a skill that’s very rare in most traders.
Choosing a stop loss is not a random activity, and perhaps the most important thing to note here is that you shouldn’t be carried away by your emotions – a great point to set your stop loss is at the cost of your coin. If, for instance, you acquired a coin at $1,000, set that as the minimum point you’re willing to trade your coin. This will ensure that if the worst comes to pass, you can walk away with what you invested in the first place.
The same applies to profit levels if you target to get out of the market after hitting a certain minimum profit; stick to that. Don’t be greedy; it’s never a nice color on anyone!
Tip#3. Welcome to FOMO!
FOMO is an abbreviation for the fear of missing out. This is one of the most notorious reasons as to why many traders fail in the art. From an outside point of view, it is never a good scene seeing people make massive profits within minutes from pumped-up coins. Honestly, I never like such situations any more than you do.
But I’ll tell you one thing that’s for sure…
Beware of that moment when the green candles seem to be screaming at you and telling to you to jump in. It is at this point that the whales I mentioned earlier will be smiling and watching you buy the coins they bought earlier at very low prices. Guess what normally follows? These coins usually end up in the hands of small traders and the next thing that happens is for the red candles to start popping up due to an oversupply and, voila, losses start trickling in.
Tip#4. Manage Your Risks
Little pigs eat a lot, but big ones get eaten. This is especially true of market profits when trading cryptocurrencies. Wise traders never run in the direction of massive profits; nope, they don’t!
They would rather stay put and gather small but sure profits from regular trades on the bitcoin up official app.
Consider investing less of your portfolio in a market that is less liquid. Such high trades require more tolerance, while the stop loss and profit target points will be allocated further from the buying level.
Tip#5. Underlying Assets Create Volatile Market Conditions
The simpler version of this is that when the value of Bitcoin goes up, the value of altcoins goes down and vice versa.
The market is normally foggy when the Bitcoin price is volatile and, as you would imagine, this prevents most traders from gaining a clear understanding of what goes on in the market. At this point, it is advisable to either have close targets for our trades or simply not trade at all.
Tip#6. Don’t Buy Simply Because the Price is Low
Most beginners make one common mistake: buying a coin because it’s price seems to be low or what they consider affordable. Take, for example, someone who goes for Ripple instead of Ethereum simply because the latter is much cheaper.
The decision to invest in a coin should have very little to do with its affordability but a lot to do with its market cap.
Just like the conventional stocks are gauged by their market caps, which is evaluated using the formula Current Market Price X Total Number of Outstanding Shares, the same applies to cryptocurrencies.
There is no difference between having a coin priced at $10 per coin with a total number of 1 million shares in the market and the same coin being priced at $100 with 100,000 shares in the market. For this reason, it is more justifiable to use a coin’s market cap to decide whether or not to invest in it than using its price. The higher a coin’s market cap, the more suitable it is for investment.